Contents. Management... 60 65 Group Management... 60 61 Country Management... 62 63 Board of Directors and Auditors... 64 65

Contents Contents SECURITAS ANNUAL REPORT 1997 The Securitas Group................................ 2 11 Integrity Vigilance Helpfulness....................... 2 3 The Chief Executive Officer: Focus Provides Security................................ 4 5 Europe An Opportunity.............................. 6 7 The Securitas Model in Figures....................... 8 9 The Securitas Share.................................. 10 11 Business Focus................................... 12 25 Guard Services and Alarm Systems A Growing Need......................... 12 23 Important Services for Banks................. 14 15 Total Security Solutions for Large Companies........................... 16 18 Alarm to Response for Smaller Companies and Retailers............. 19 21 Home Alarms A Rapidly Growing Market................................ 22 23 Cash In Transit Services Focus on Efficient Money Flows............................... 24 25 Development in Countries of Operation....................................... 26 37 Sweden................................................ 26 27 Norway Finland Denmark.................... 28 29 Germany France.................................. 30 31 Great Britain Spain............................... 32 33 Portugal Switzerland Austria................ 34 35 Hungary Estonia Poland...................... 36 37 Financial Reporting............................ 38 59 Report of the Board of Directors.................. 38 41 Consolidated Statement of Income..................... 42 Consolidated Cash Flow Analysis...................... 43 Consolidated Balance Sheet........................ 44 45 Parent Company...................................... 46 47 Accounting Principles................................ 48 49 Treasury Policy....................................... 50 51 Notes to the Financial Statements................. 52 59 Audit Report............................................... 59 Management........................................ 60 65 Group Management................................. 60 61 Country Management............................... 62 63 Board of Directors and Auditors.................. 64 65 Other Information............................... 66 68 Addresses............................................. 66 67 Financial Information.................................... 68

The Securitas Group Integrity Vigilance Helpfulness We are more than 40,000 people who give Securitas a face. Our knowledge, ability and ambition to do a good job create Securitas image among our customers and the general public. Our mission is to protect homes, work places and community. Our quest during Securitas 60-year history has always been to live up to our three lead words Integrity, Vigilance, and Helpfulness. This has built confidence in us with our customers and has enabled us to keep on growing. It is also this culture that has helped Securitas to grow in Europe. With the recommendations of loyal customers and the respect of industry colleagues, we have entered into new countries step by step, getting to know new companies and people. During the 1980 s Securitas took the first steps towards becoming Europe s leading security company. Growth and increased profitability were combined with acquisitions in Norway, Denmark and Portugal, and establishing operations in Hungary. In September 1991 Securitas was listed on the Stockholm Stock Exchange. The 1990 s have continued to be distinguished by growth and acquisitions in France, Germany, Switzerland, Austria, Spain, Finland, Estonia, Poland and Great Britain. Today Securitas is the leading security company in Europe, with operations in 14 countries. Sales in 1997 reached approximately MSEK 11,000. This development has also resulted in a security industry that today consists of more than merely guards and guarding. New business areas have been added and the services have continued to develop and become more specialized. Every member of our staff wears the Securitas insignia. Under this emblem we unite individuals in our efforts to do a good job and to develop ourselves and the Company. The three red dots of the Securitas logotype are a reminder of our three lead words that guide us in these efforts. Integrity, Vigilance and Helpfulness remain the foundation of Securitas. SECURITAS ANNUAL REPORT 1997 The History of Securitas Securitas Direct is established as an international division. Acquisitions in France, Securitas is founded in Helsingborg, Sweden. New owner and management: Concentration on security. Acquisition of Assa. Acquisitions in Norway, Denmark and Portugal. Operations are established in Hungary. Switzerland, Spain, Austria and Germany. Securitas is Acquisition in listed on the Stockholm Finland. Stock Exchange. Spin-off of Assa-Abloy to the shareholders. Convertible to the employees. Further acquisitions in France and Sweden. Acquisitions in Great Britain, Poland and Estonia. 1934 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Year Left: Securitas guard Martin Klinkert works as a patrol guard at a shopping mall, where security and safety are important to customers. 3

The Chief Executive Officer: Focus Provides Security The beginning of 1997 was slow but the year ended strong. We encountered a heavier restructuring in Germany than we had anticipated, but were also happy to see a quick turnaround in the recently acquired business in Great Britain, a doubled rate of expansion for Securitas Direct and the acquisition of TeleLarm. Our goal for the next three years is clear continued organic growth, operating margin in existing operations of up to 10 percent, and additional acquisitions to confirm our position as Europe s leading security company. The growing European security market worth about SEK 180 billion offers great opportunities. The year in brief Sales increased by 19 percent to MSEK 10,763 (9,074), 7 percent of this increase being due to organic growth, and the remainder to acquisitions. The organic growth, which was a continuation of the trend of prior years, demonstrates that development and refinement of various security service opens up new and growing markets. Income before taxes increased by 12 percent to MSEK 614 (550). The first half of the year was characterized by losses and restructuring costs in the German Cash In Transit Services business. The situation in Germany improved during the second half of the year, and other operations posted a stronger development as well. Our earnings performance was thus back to the previous trend of about 20 percent annual income growth. The average annual growth in sales over the last 10 years has been 27 percent, with income growth of 29 percent. Nordic operations have had strong development, both in terms of volume and income. In Sweden, thanks to the acquisition of TeleLarm, the Group s Alarm Systems business was strengthened. In Finland a nation-wide Cash In Transit Services business has been built. The Cash In Transit Services businesses acquired in Great Britain during 1996 have been turned from significant losses into profitable operations starting 1998. Heavy restructuring of the Cash In Transit business in Germany was completed during 1997, and the business is expected to achieve a break-even result for 1998. The German Guard Services business posted strong volume and earnings growth. The Cash In Transit business in Spain has Chief Executive Officer Thomas Berglund at Securitas Alarm Monitoring Station in Stockholm. recovered from losses of volume at the beginning of the year. In Guard Services, and particularly in Alarm Systems, the positive development in Spain continues. Other Western European nations show a strong development. Portugal retains its position as the Group s most profitable country. The good development in Eastern Europe continues in Hungary and the new businesses in Poland and Estonia show a promising trend. Sharper focus A virtual doubling of the growth rate in Securitas Direct, from about 10,000 to almost 20,000 new alarms sold, is proof of the force that follows from a sharper focus. The Direct operations in the different countries were combined at the beginning of 1997 into one unit under joint management, which is one of the major reasons for the increasing growth rate. Cash In Transit Services operations have also received increased attention during the year as a separate business area, and we are assuming that this business will become even more clearly defined as a separate business unit. The current position We are now Europe s leading security company, with annual sales of more than SEK 11 billion and good organic growth. The operating margin stands at 7.2 percent. Our market share is 6 percent of a market worth SEK 180 4

The Securitas Group Market and growth Nordic Region The Big Five Other Western Europe Eastern Europe Securitas Market in market Growth strategy Region SEK billion share in % Organic Acquisition Nordic Region 15 35 Yes Partly The Big Five 135 4 Yes Yes Other Western Europe 24 5 Yes Yes Eastern Europe 6 2 Yes Partly Total 180 6 billion, which grows by at least 5 percent per year. After extensive restructuring and integration work, we now have a good grip on the acquisitions of recent years in Great Britain, Germany and Sweden. A three-year perspective We will remain a focused security company. We believe that the future holds more opportunities with increased specialization on the individual needs of different customer groups, and by offering complete security solutions. This will call for an even sharper focus on our part not only on the various countries of operation but also on the development of individual business areas in each country. With increased focus on each business area, we believe that organic growth can remain at the current level for the next three years: 5 7 percent. We also believe that the operating margin during the same period can increase from 7.2 percent to 10 percent in existing operations. The raised margin will be generated in all countries and business areas, but a significant portion will be derived from the during 1997 restructured Cash In Transit businesses in the big countries. During this period Securitas Direct will also more than double its annual growth rate and the focus on alarms for smaller companies and chains will increase. We now have about 75,000 alarm customers in Securitas Direct and the number should grow to more than 200,000 in the next three years. Today we also have about 125,000 smaller and medium-sized companies among our alarm customers. This business is at a slightly slower growth rate than Direct due to insufficient focus so far. As far as future acquisitions are concerned, they will be concentrated on areas we call the big five and the other Western Europe. Not only do we need to cover certain white spots on the map of Europe, but we also need to strengthen the different business areas. The security business remains severely fragmented, which is demonstrated by the fact that with a market share of 6 percent, we are the largest. Acquisition targets are not lacking. Seen in a historic perspective, we believe that acquisitions can add between one and two billion SEK annually in new sales. Employee convertible Employee commitment is the key to Securitas development. This commitment begins when each employee clearly and distinctly can see his or her role in the whole, and gets the training and education needed to fulfill that task. Compensation must also be such that people want to stay and develop with the Company. For some employees, an engagement in the development of the company as an owner may further strengthen this commitment. All employees were therefore offered to acquire shares on equal terms in Securitas when the Company went public in 1991. Also, when Securitas distributed Assa Abloy to its shareholders in 1994, a convertible offering was made to all employees. Since 1994 both sales and the number of employees have almost doubled. Therefore, it is now time to make a new offer to Securitas personnel. The subordinated convertible debenture issue decided in January 1998 has a term of five years, on market terms, and the offer is directed to all employees on the same conditions. I am convinced that the offer will contribute to continued good development for Securitas. 1998 We anticipate continued organic growth in all countries and in all areas of operation for 1998. We also believe in strong earnings performance, allowing us to maintain a long-term trend of annual earnings growth of about 20 percent, with 1998 in line with this trend. STOCKHOLM, MARCH 1998 Thomas Berglund President and Chief Executive Officer SECURITAS ANNUAL REPORT 1997 5

Europe An Opportunity Sales of private security service SEK billion 500 400 300 200 100 SEK billion 80 France, Ireland, Italy, Luxembourg, The Netherlands, Norway, Switzerland, Great Britain, 60 Germany, Hungary 40 20 0 12 % USA* Europe Consumption in European countries of guard services relative to GDP Belgium, Denmark, Estonia, Finland, Greece, Poland, Austria, other Eastern Europe 3-4 % 0 1980 1985 1990 1995 Less than1 Between 1 and 2 More than 2 Size of the guard industry relative to GDP Market shares by region and business area, in percent 1997 9 % The European security market is expected to grow to about SEK 350 billion in 10 years. * Source: Private Security Trends 1970 2000 The Hallcrest Report Portugal, Spain, Sweden 6-7 % Growth rate 2000 2005 The size of today s professional security guard markets relative to GDP varies from country to country. As companies concentrate on core businesses, specialized security companies are increasingly retained. In Europe the guard services market accounts for SEK 86 billion of the total security market of about SEK 180 billion. Cash In Guard Alarm Transit Region Services Systems Services Direct Total Nordic Region 45 22 43 50 35 The Big Five 5 <1 14 2 4 Other Western Europe 6 1 10 >0 5 Eastern Europe 2 2 12 0 2 Total 8 3 15 6 6 The European security market is estimated to be worth SEK 180 billion, of which Securitas, as the largest company, accounts for about 6 percent. In 1997 the European security companies sold services for approximately SEK 180 billion, of which Securitas, as the largest company, accounts for about 6 percent. There are great growth opportunities for Securitas in Europe. Growing market In the European market guard services account for SEK 86 billion with an annual growth rate of just short of 5 percent, alarm systems for SEK 78 billion with an annual growth rate of almost 10 percent and cash in transit services account for SEK 16 billion with an annual growth rate of slightly below 10 percent. Growth is especially strong in Alarm to Response services for smaller companies and homes, where the annual growth rate is estimated to exceed 20 percent. For the entire security market, this means an annual rate of growth of 6 7 percent. The security market has grown, and continues to grow as the increasing technical and financial complexity of society grows, and hence its vulnerability. The trend is the same in all parts of the world. In the United States, for instance, the annual growth rate is estimated to be about 9 percent. Demand is to some extent cyclical and slows down slightly during periods of economic weakness. Outsourcing has begun more on the way The increasing vulnerability and specialization of society is the driving force behind more and more outsourcing of security work. In some countries this outsourcing has been going on for a long time, while it started more recently in other countries. Crucial to the rate of outsourcing is the structure of industry and commerce in each respective country, and also the level of activity of the security industry as such. A simple, but clear, measurement to illustrate the differences between different countries is to look at the size of the guard services industry relative to the gross domestic product. Certain European nations have a penetration as low as 0.5, while other countries are above 2.0. Securitas a market leader but with a small market share With about SEK 11 billion in sales, Securitas is the market leader with a share of about 6 percent of the total European security market. This shows that the market, in spite of many structural deals, remains highly fragmented. 6

The Securitas Group Since 1989, when Securitas made its first acquisitions, we have completed about 30 individual acquisitions. These have added an aggregate of about SEK 7 billion in new business. The organic growth during the same period was approximately SEK 2 billion, which is equivalent to an average annual growth rate of about 6 percent. Most of the acquisition targets have been unprofitable businesses or businesses with low profitability, which with an introduction of the Securitas model have been developed into growing and profitable operations. It is up to us The trend of the underlying market is up, outsourcing contributes a great extent to this growth, and the potential for additional outsourcing is still great. In spite of a number of acquisitions, Securitas still only commands a market share of about 6 percent. The conclusion is simple: Big potential remains, and there is plenty of room for expansive security companies it s all up to us! The need for security is increasing and being differentiated In order to capitalize successfully on the growth of the market, better understanding of how security needs evolve for different types of customers is required. The trend is towards increasingly specialized needs in each respective industry and area of operation. This specialization of the security needs leads to demand for entirely new types of services airport security is a typical example of a service that barely existed a couple of decades ago. The challenge is first to choose the right customer groups, and then to build and deliver the right solutions to the selected customer groups. This is the base for continued and accelerated organic growth. It is also the basis for continued acquisitions if we cannot create growth within the volume we have, we do not have the legitimacy or the reason to acquire new volume. Acquisitions accelerate growth rate We will continue to acquire companies at the rate the organization has capacity to restructure and integrate new volume. Acquisitions are not an end unto themselves, but are a way of increasing our strength in selected geographic markets and business areas. On a long-term basis, acquisitions will contribute to a gradually rising operating margin. With the exception of the Nordic markets, the potential for acquisitions is very large. It is particularly important to become stronger on the large markets in Europe. Sales by acquisition and organic SEK billion 12 10 8 6 4 2 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Importance of security for the core business Customer group: Bank Nuclear power plant Airport Defense industry Food industry Process industry Pharmaceutical industry Supermarkets Clothing retailing Pharmacies Jewelry stores General office Gasoline station Acquisitions, SEK billion Organic, SEK billion Securitas sales by acquisitions and organic growth over the last ten years. < LESS Importance of security for core business MORE > The foundation for improved and accelerated organic growth is to build and deliver the right solutions for the different customer groups. Structure of the European security market Market share, % 100 80 60 40 20 0 Nordic Region The Big Five Other Western Europe The security market in Europe remains fragmented. Eastern Europe Share, small companies Share, other large companies Securitas share SECURITAS ANNUAL REPORT 1997 7

The Securitas Model in Figures Sales SEK billion 12 10 8 6 Acquisition share of sales Sales All businesses in the Securitas Group use a common framework for financial follow-up. This framework is based on the central themes of the Securitas model structuring, refinement and growth. 4 2 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Sales have grown annually by an average of 27 percent over the most recent 10-year period. During 1997 sales increased by 19 percent, 7 percent of which was organic growth. Operating margin % 8 6 4 2 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Refinement and efficiency improvements have gradually raised the operating margin, which in 1997 reached 7.2 percent. Most of the acquisitions have been no or low income businesses, which occasionally have had a negative effect on the operating margin. Income before taxes MSEK 600 400 200 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Income before taxes has grown by an average of 29 percent annually over the most recent 10-year period. In 1997 income before taxes rose by 12 percent to MSEK 614. The development of the profitability in the different business areas is analyzed on a monthly basis by focusing on a few key factors of importance to earnings performance in each respective business area: new sales of contracts and orders received, changes in the portfolio of contracts and invoicing, i.e. volume-related factors. Other key factors are the gross margin and overhead costs, both of which are efficiency-related. Further factors are the development of accounts receivable and capital expenditures, which are measures of tied up capital. Follow-up and verification of the Group s long-term Income, MSEK 1997 1996 1995 1994 * Sales 10,762.9 9,074.3 7,309.1 6,843.8 whereof acquisitions 1,002.6 1,784.2 820.9 Operating income before amortization of goodwill 777.8 687.9 548.7 482.5 Operating margin, % 7.2 7.6 7.5 7.0 Amortization of goodwil 115.5 99.4 65.9 63.9 Net financial items 48.2 38.7 11.0 26.6 Income before taxes 614.1 549.8 471.8 392.0 Taxes paid 114.4 127.7 104.6 98.9 Deferred taxes 54.7 39.8 19.8 50.2 Minority interest 0.9 0.2 0.4 0.2 Net income for the year 445.9 382.1 347.0 242.7 Cash flow, MSEK 1997 1996 1995 1994 * Operating income before amortization of goodwill 777.8 687.9 548.7 482.5 Net financial items 48.2 38.7 11.0 26.6 Taxes paid 114.4 127.7 104.6 98.9 Adjusted income 615.2 521.5 433.1 357.0 Change in working capital 57.3 8.5 75.6 67.9 Capital expenditures 557.4 475.6 339.1 292.7 Depreciation and amortization 450.5 354.0 289.8 262.2 Free cash flow 451.0 391.4 308.2 394.4 Capital employed and financing, MSEK 1997 1996 1995 1994 * Operating capital employed 2,182.1 1,590.7 1,103.2 1,068.7 Shares in associated companies 258.4 Goodwill 1,457.4 1,180.7 590.5 649.5 Net debt 1,532.5 738.6 75.0 122.6 Shareholders equity 2,365.1 2,032.6 1,767.8 1,589.7 Total assets 7,911.5 6,438.1 5,014.5 4,532.1 8

The Securitas Group earnings performance is focused on six financial measurements, all of which relate to key factors in each respective business area. The key figures in the Group are as follows: Sales, where growth may occur either organically or through acquisition. Operating margin, where an increase reflects efficiency improvements and refinement for higher customer value. Income before taxes, which is affected by sales and the operating margin. Free cash flow, which verifies earnings performance. Operating capital employed as a percentage of sales, where good control over accounts receivable and balanced capital expenditures lead to low capital employed. Net debt equity ratio, where a strong cash flow and a low need of capital employed makes growth possible without an appreciable increase in net indebtedness. The evolution of these six key figures is illustrated here, numerically and in diagrammatic form. 1993 1992 1991 1990 1989 1988 6,010.6 5,734.8 3,030.4 2,720.7 2,361.6 1,268.3 160.3 2,522.0 838.0 Free cash flow MSEK 500 400 300 200 100 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Free cash flow reflects earnings performance. On average, free cash flow has been 84 percent of adjusted income during the most recent 10-year period. During 1997 free cash flow increased by 15 percent, to MSEK 451. Operating capital employed as a % of sales % 20 15 SECURITAS ANNUAL REPORT 1997 368.8 342.6 234.3 136.6 94.3 62.8 6.1 6.0 7.7 5.0 4.0 5.0 37.2 26.8 15.0 10.5 8.1 1.5 1.6 16.6 8.6 7.9 13.8 2.6 330.0 299.2 227.9 134.0 72.4 63.9 81.6 52.0 33.3 24.0 7.0 6.2 10.7 20.7 16.0 14.8 11.9 7.3 2.1 0.1 0.0 0.3 0.1 0.0 257.0 226.4 178.6 94.9 53.4 50.4 1993 1992 1991 1990 1989 1988 368.8 342.6 234.3 136.6 94.3 62.8 1.6 16.6 8.6 7.9 13.8 2.6 81.6 52.0 33.3 24.0 7.0 6.2 285.6 274.0 209.6 120.5 73.5 59.2 3.2 148.2 92.4 124.0 32.6 26.8 231.6 207.1 209.1 218.7 119.8 71.3 246.1 208.9 132.9 111.4 99.8 49.9 296.9 127.6 225.8 137.2 86.1 64.6 1993 1992 1991 1990 1989 1988 1,030.0 910.3 380.2 239.6 279.3 58.3 53.1 74.3 74.5 0.8 440.2 322.1 26.8 32.5 21.2 9.9 78.2 99.6 131.9 125.1 86.3 33.6 1,375.0 1,173.6 349.3 221.1 214.6 34.4 4,451.7 4,249.8 2,414.1 2,254.4 1,357.2 733.8 * Pro forma accounting for the full year 1994 is made up of the sum of the two abbreviated financial years during 1994. 9 10 5 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 With control of accounts receivable and capital expenditures, capital employed can be kept low. The increase over the most recent 10-year period is explained by acquisitions of businesses with more extended payment terms and a larger proportion of Cash In Transit Services, which require more capital expenditures. Net debt equity ratio times 1.0 0.8 0.6 0.4 0.2 0.0-0.2 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Strong cash flow and controlled development of capital employed gives opportunity for growth with reasonable indebtedness.

The Securitas Share Earnings per share * SEK 6 5 4 3 2 1 0 Assa Abloy AB distribution 1993 1994 1995 1996 1997 Earnings per share have grown by an average of 15 percent per year over the most recent four-year period. * After 28 percent standard taxes. Dividend per share SEK 3 2 1 0 Assa Abloy AB distribution 1993 1994 1995 1996 1997 The annual dividend has grown by an average of 16 percent over the most recent five-year period. In addition to the regular dividend, a distribution of shares in Assa Abloy AB was effected during 1994. EBIT multiple times 25 20 15 10 0 Assa Abloy AB distribution 1993 1994 1995 1996 1997 Securitas market capitalization increased by about 22 percent during 1997. During 1994 Securitas distributed all shares in Assa Abloy AB. 10 The Securitas share has been listed on the Stockholm Stock Exchange since 1991. Both the market capitalization and the number of shares traded have risen sharply since then. In recent years the Securitas share has been among the most heavily traded on the Stockholm Stock Exchange. The market price of the Securitas share rose by 21 percent during 1997. The composite index of the Stockholm Stock Exchange rose by 25 percent. Securitas market capitalization at year-end 1997 was MSEK 17,570 (14,430). A total of 23.1 million Securitas shares were traded on the Stockholm Stock Exchange, which was 71 percent higher turnover than in 1996. Dividend The Board of Directors proposes a 15 percent dividend increase to SEK 2.75 per share. This dividend is equivalent to a dividend yield of 1.1 percent on the price of the Series B share on December 30, 1997. Future dividends will depend on consolidated earnings, and are expected to correspond to at least one third of income after financial items and standard taxes of 28 percent. Per share data 1) SEK/share 1997 1996 1995 1994 1993 2) Income after taxes paid 6.78 5.81 5.09 4.07 4.38 same after 28% standard taxes 6.00 5.46 4.72 3.92 4.17 same after full taxes method 6.04 5.28 4.82 3.38 4.55 Dividend 2.75 3) 2.40 2.00 1.67 4) 1.50 Dividend in % 5) 46 44 42 43 36 Dividend yield, % 1.1 1.2 1.9 2.5 1.9 Share price, end of period 240.00 198.50 105 67 79 High share price 250.00 203.00 105 95 82 Low share price 174.00 94.90 64 60 48 Average share price 207.84 145.42 79 76 66 P/E-ratio, times 40 38 22 20 17 No. of shares (1,000 s) 74,243 74,243 74,243 74,243 70,899 1) After full conversion. Per-share data adjusted for split 3:1 in 1996. 2) Including Securitas Lock Group. 3) Proposed dividend. 4) In addition to the regular dividend, shares in Assa Abloy AB were distributed in 1994. 5) Dividend as a percentage of earnings per share after 28 percent standard taxes. Definitions Dividend yield. The dividend relative to share price at the end of each respective year. For 1997, the proposed dividend is used. P/E ratio (price/earnings). The share price at the end of each respective year, relative to earnings per share after full taxes. EBIT multiple. The Company s market capitalization and net liabilities relative to operating income before amortization of goodwill, net financial items and taxes. Trading volume. Turnover during a period at an annual rate relative to the average market capitalization during the period.

The Securitas Group Share capital The share capital amounts to MSEK 146.4, divided into 73.2 million shares, each with a nominal value of SEK 2, whereof 4.3 million shares are Series A and 68.9 million shares are Series B. Each Series A share carries ten votes and each Series B share carries one vote. Year Transaction No. of share SEK 1987 Opening capital 200,000 20,000,000 1989 Non-cash issue 285,714 28,571,400 1989 Rights issue 342,856 34,285,600 1989 Split 50:1 17,142,800 34,285,600 1989 Stock dividend 17,142,800 85,714,000 1992 Rights issue 22,142,800 110,714,000 1993 Conversion 23,633,450 118,167,250 1994 Non-cash issue (Spain) 24,116,450 120,582,250 1996 Split 3:1 1) 72,349,350 120,582,250 1996 Stock dividend 1) 72,349,350 144,698,700 1996 Conversion 72,697,739 145,395,478 1997 Conversion 73,206,315 146,412,630 1999 Convertible debentures outstanding 2) 74,242,896 148,485,792 1) A split 3:1 was made during 1996 and a stock dividend, changing the nominal value of the share from SEK 5 to SEK 2. 2) The term of the loan is until June 30, 1999. Conversion to Series B share may be requested at a price of SEK 91.30 during the period July 2, 1996 to June 1, 1999. Full conversion will result in 1,036,581 new shares. Major owners* Percentage of Owners, December 31, 1997 A shares B shares capital votes Investment AB Latour 7,950,000 10.9 7.1 Janus Funds 5,700,000 7.8 5.1 Melker Schörling + companies 750,000 4,245,125 6.8 10.5 Förvaltnings AB Wasatornet 3,750,000 5.1 3.4 SPP 3,686,970 5.0 3.3 SäkI AB 3,535,650 4.8 31.6 Femte AP-Fonden 2,521,650 3.4 2.2 Comgest S.A. 1,892,445 2.6 1.7 AMF Försäkring 1,745,000 2.4 1.6 WASA 1,208,150 1.7 1.1 Total, ten largest owners 4,285,650 32,699,340 50.5 67.6 Ownership structure** Percentage Owners with: No. of owners No. of shares of capital more than 100,001 shares 76 64,639,880 88 50,001 100,000 shares 38 2,747,338 4 20,001 50,000 shares 64 2,050,333 3 5,001 20,000 shares 142 1,587,206 2 1,001 5,000 shares 454 928,262 1 up to 1,000 shares 6,207 1,253,296 2 Total 6,981 73,206,315 100 As of December 31, 1997 Securitas had about 7,000 shareholders according to VPC an increase by about 10 percent since 1996. The principal owners are Investment AB Latour, who together with Förvaltnings AB Wasatornet and SäkI AB holds 20.8 percent of the capital and 42.1 percent of the votes, and Melker Schörling with companies, who own 6.8 percent of the capital and 10.5 percent of the votes. Institutional investors account for 90 percent of the capital. Investors outside Sweden account for 49 percent (50) of the capital. * Source: VPC and changes known to Securitas. ** Source: VPC. 11 Stock price performance SEK 260 220 180 140 100 60 Securitas B Composite index Price exclusive of Assa Abloy AB 20 91 92 93 94 95 96 97 98 The market price of the Securitas share has increased by an average of 22 percent per year over the most recent five-year period. Valuation times 40 30 20 10 0 Assa Abloy AB distribution P/E-ratio Securitas 1993 1994 1995 1996 1997 SIX Findata P/E-ratio Stockholm Stock Exchange The average P/E ratios during 1997 increased more for the companies on the Stockholm Stock Exchange than Securitas P/E ratio. Liquidity MSEK % 5,000 50 Trading volume, % Assa Abloy AB 4,000 distribution 40 3,000 2,000 1,000 0 Turnover, MSEK 1993 1994 1995 1996 1997 Trading of the Securitas share on the Stockholm Stock Exchange has increased by an average of 45 percent per year over the most recent five-year period. During 1997 trading increased by 40 percent. 30 20 10 0 SIX Findata * SECURITAS ANNUAL REPORT 1997

Business Focus Guard Services and Alarm Systems A Growing Need Securitas Guard Services and Alarm Systems had 1997 sales of MSEK 8,349 (7,164). Guard Services is the largest of the two with approximately 59 percent of total sales, and Alarm Systems accounts for about 18 percent. The entire business community is changing at an ever faster pace. Companies become more vulnerable to production disturbances as competition gets tougher and when the business becomes more dependent on modern technology. The risk of production disturbances increases the need for security in the form of protection and preventive action. A growing number of entities therefore retain professional security companies. This trend is strengthened as companies increasingly focus on their core businesses and use specialist companies for security duties, which earlier were handled in-house. Adapted solutions Total security solutions is one example of how Securitas adapts services to the business community to new and varying needs. We are increasingly dealing with specially adapted combinations of personal guarding and alarm systems. Banks need advanced alarm systems that when triggered, lead to prompt response. The alarm is often combined with mobile patrols and access control. Large customers often need specially adapted solutions with a combination of access control, mobile patrols and alarm systems. Small customers may need a standardized alarm system which is connected to an alarm monitoring station. Small companies can also share the cost of a guard, who protects their premises against burglary. Retailers can retain guards who help customers find their way and keep an eye on the operation to prevent robbery and shoplifting. Homes most often need a standardized alarm system connected to an alarm monitoring station. Home alarms through Securitas Direct is Securitas fastest growing business area. Securitas Direct s alarm monitoring station serves homes. The Bank Monitoring Center for banks and the Customer Care Center in Securitas Response for smaller companies are other examples of how alarm stations have been specialized for selected customer groups. This specialization and focus is expected to continue. Strategic acquisition of alarm company Alarm systems is the part of the security market with the fastest growth. That is because banks and large companies have come to the realization that alarm systems are cost-efficient complements to personal guarding in combination with security technology. By acquiring the Swedish alarm company TeleLarm, greater opportunities are created for making customeradapted security solutions. Market and competitors The total European guard services market is estimated to be worth about SEK 86 billion, with annual growth of just short of 5 percent. Securitas share of this market is about 8 percent. The European alarm systems market is estimated to be worth about SEK 78 billion, with annual growth of almost 10 percent. Securitas share is about 3 percent. Securitas today is a focused European security company, while most competitors have concentrated on single countries or regions. The competitive picture therefore varies from country to country. In the Nordic Region, the Danish company Falck is the largest competitor. In Central Europe, Securitas competes with Proteg in France, Raab Karcher Sicherheit in Germany, and with Group 4, Securicor and Rentokil in Great Britain. The Swiss fire alarm company Cerberus also has operations in several European countries. In Southern Europe, Prosegur is the biggest competitor in both Spain and Portugal. Customer in focus Bank Postal Bank Process industry Administr. Office Distribution Transport Large customers Small customers Retail Trade Retail Home Home large medium small SECURITAS ANNUAL REPORT 1997 Left: Securitas guard Melanie Filous works at a passenger checkpoint at the Tegel airport in Berlin, Germany. Securitas manages security at 24 European airports. In most cases it is a matter of access and luggage control, ID checks, mobile patrols and cash in transit services. Proximity to the customer, and understanding of the real needs of the customer, create opportunities of development for the customer as well as Securitas. The market matrix is an internal tool to specialize the proficiency and hence better fulfill customer needs. 13

Important Services for Banks Banks are one of Securitas most important customer segments and for obvious reasons, their requirements for security are very high. Alarm to Response is Securitas term for a package of products and services for customers who need secure and reliable protection against robbery, assault, theft and burglary. An alarm must both function as a deterrent and reduce the number of robberies and robbery attempts. Response to an alarm must therefore be swift. In Sweden, Securitas has created a unique concept through the Bank Monitoring Center. Alarm installations at over 2,300 bank branches are directly connected to this center that works exclusively with bank security. By creating efficient routines for systematically following up all alarms, the Bank Monitoring Center has contributed to creating effective and secure bank alarm systems. This has contributed to higher quality, and the number of false alarms has been drastically reduced. This also means economic savings and confidence in the systems is increased. This also increases security. The close interaction among the Bank Monitoring Center, bank branch offices, alarm installers and the police has contributed to sharply lowering the number of bank robberies in Sweden in recent years. During 1997 only 22 robberies occurred, compared with, for instance, 120 in 1994. Other Securitas companies in Europe are preparing to introduce similar alarm monitoring centers for their bank customers. New structure Tougher competition is prompting the banks to rationalize and to make their operations more efficient. The rapid changes create new structures where the roles and tasks of the banks change. Security on bank premises Customer in focus Customer segment Bank Advanced alarm systems prevent disturbances The joint payment and cash processing center of the Norwegian banks is an important part of the Norwegian infrastructure. There would be serious disturbances in the country s economy if, for example, operational disturbances or other incidents were to occur. Securitas in Norway has installed an advanced alarm system to protect operations against any sabotage and burglary, and is also responsible for access control. This is accomplished with seven own guards, and with a system for technical access control. The payment and cash processing center has been a Securitas customer since 1991. The company feels that a functional access control system that fulfills high security demands has been achieved in cooperation with Securitas. Securitas protects companies against sabotage and burglary with the help of advanced alarm systems. 14

Business Focus continues to be a high priority, however. Among the effects of changes is that customers have to take over a lot of the handling of cash themselves, something that the banks used to handle for their customers across teller counters. In all European countries the number of ATMs (cash dispensers) is growing rapidly. Many banks are also building automated banks, where the customers can not only withdraw funds, but also deposit money. SECURITAS ANNUAL REPORT 1997 New security needs Aside from the traditional risks for banks in the form of production disturbances, robbery and fraud, the changes lead to new or altered risks, and hence different security needs. ATMs and automated banks need alarms and perhaps also TV monitoring and regular patrolling by guards in order to function as a secure environment for the customers. Due to rationalization, it is becoming increasingly common for stores, especially in rural areas, to take over some of the traditional banking services. Information technology has changed the way companies produce, working conditions and communications. This has also changed the risk profile in most companies, and also for the banks. For Securitas the new risks mean an opportunity to satisfy new security needs. Bank s security needs are high by nature. Many banks therefore choose to hire Securitas, who is a stable and long-term supplier. The picture shows Securitas Bank Monitoring Center in Stockholm. Secure bank for customers and employees Banks connected to Securitas Bank Monitoring Center get continuous assurance that their alarm system is always functioning properly. If something happens, Securitas immediately takes action in accordance with instructions worked out with the bank s security department. It can be a matter of making functional alarms that for a variety of reasons may have been disabled, or dispatching a guard, and calling the police if there is a burglary attempt or other incidents. Banks cannot afford to neglect security. Many of the Swedish banks who use the Bank Monitoring Center declare that they want to buy alarm and guard services from a supplier who has stable and long-term role in the market, and who has the resources to continue developing new services to fit their needs. In the competition for workers it is also important for the banks to be able to offer a safe and secure work environment. Bank branch offices in central Stockholm have since 1997 also started using Securitas City Group, consisting of 15 guards who regularly visit shops and bank premises. The idea is that the guards through their presence will deter crime and, for instance, prevent persons under the influence of drugs to cause disturbances. For the employees at the bank offices it is secure to know that they can call on a guard who will be on location within 60 seconds if something should happen. 15

Total Security Solutions for Large Companies As a result of tougher competition and increased dependence on modern technology, the sensitivity of large companies to production disturbances has increased. For industries, nuclear power plants, airports, insurance companies, defense installations and shopping centers it is therefore becoming increasingly important to prevent damage. In order to offer total security solutions, that both protect and prevent, Securitas works with risk assessment. Securitas specialists perform risk assessments by identifying customer risks, possible damage scenarios and by estimating the impact of different kinds of damage. Based on the risk assessment, Securitas then formulates a proposal for a total security solution in consultation with the customer s representatives. The result is often a total solution where trained guards interact with modern technology. For large companies it is an advantage to have only one supplier of alarm and guard services. Securitas follows the development of the companies and can quickly adapt installations and guard routines to any changes that may occur. For several years now, the traditional gate control at companies has been replaced by a combination of patrol guards, alarm systems, TV surveillance and technical access control. People and technology Increasingly higher demands are being placed on guards who work at large companies. They must be able to handle and respond quickly to information from access control and alarm installations. With the help of modern information technology, Securitas ties together different systems into a clear and well-arranged unit which facilitates the guard s work. For instance, access control can be effectively handled without compromising security. Customer in focus Customer segment Large customers Many risks in pharmaceutical production Pharmaceutical companies need total security solutions and therefore engage Securitas. The advanced research at pharmaceutical companies requires careful security precautions. Ever increasing competition makes it crucial not to disturb the research efforts or the production. The risk of industrial espionage and sabotage is always present. Since pharmaceutical companies handle large quantities of solvents, there is also always a fire hazard. Effluents of contaminants in nature, water leaks and interruption of the electricity supply are other risks. Securitas tailor-makes security solutions for pharmaceutical companies, with static and patrol guards, receptionists, access control and alarm and fire systems. Many large companies, such as pharmaceutical companies, choose total solutions with patrol guards, receptionists, access control and alarm and fire systems. 16

Business Focus SECURITAS ANNUAL REPORT 1997 The fire protection guard makes a fire inspection and follows up on what has been decided in connection with insurance company inspections. With the aid of TV camera a guard can handle access control at several checkpoints in a company. Even if they are miles apart. Modern guarding is much about technology. At the same time the technology must be served by people who stand up under stress and have the ability to be attentive over several guard sites at the same time. Since a guard is also the company s face to the public, he or she must also be service-minded and have good language skills. Airports require high security Airport security is a growing business area within the large companies customer group. Terrorism, burglaries and bomb-threats are some of the risks an airport is exposed to. Disturbances may lead to everything from delays and burglaries, to accidents with personal injury, and even death. The security level at an airport must therefore always be high. Securitas assignments include access control and luggage checks, ID control, patrolling with guards, Cash In Transit services and VIP services. More and more of the security work at European airports is handled by private security firms. Securitas handles security at 24 European airports and thus follows closely the development together with its customers. One advantage in the competition is that Securitas works in many countries, and is therefore in a position to transfer experience from one assignment to another. Airport security is one of Securitas growth areas. Security services at airports include services such as access control, luggage checks, ID control, patrol guarding, Cash In Transit services and VIP service. Development of the guard profession Changing needs and greater demands from customers mean that guards get more interesting and stimulating assignments. The status of the guard profession is raised as more and more companies realize they need professional guards to conduct secure and high-quality business. Proximity to the customer and understanding the customer s real needs create opportunities for development for the customer as well as for the Securitas guard. Fire protection, environmental and IT guards are examples of how Securitas specializes guard competence to meet the customer s need and new demands. The fire protection guard performs fire inspections and follows up on what has been decided in connection with insurance company inspections. Checks of extinguishing materials and fire protection equipment are other assignments. This specialized guard also calls attention to fire hazards and checks fire door systems. 17

Customer segment Large customers Customers are happy in secure shopping centers Shopping centers are another group of large corporate customers with many and varying security needs. Securitas Guards assignments at shopping centers include replenishing ATMs, picking up and counting daily receipts and then transporting this cash to different banks. At shopping centers Securitas guards often also assist in monitoring shops and parking lots, and help customers find their way around the often large facilities. Other assignments may be to monitor and maintain fire and burglary alarm systems, and to function as night watches. A shopping center should be open and inviting, and at the same time a secure place for the customers. Securitas currently works with security at about one hundred shopping centers all over Europe. The environmental guard may oversee a company s adherence to its environmental policy, and report data and current environmental protection level. The environmental guard monitors environmentally sensitive processes, checks inventories of hazardous goods and oversees loading and unloading of same. The environmental guard may also oversee a company s adherence to its environmental policy, and report data and current environmental protection level. Information technology is changing companies production, working conditions and communications. New risks emerge. Securitas therefore now offer IT security guards as an assurance for corporate IT protection and to keep the risks under control. It may be a matter of checking to see that the connection between the computer and its data bases is turned off after the day s work. The IT guard can also make sure that the backup equipment is functioning properly and check to see that no confidential printouts are left behind. A shopping center should be open and inviting, and at the same time a secure place for the customers. Many shopping centers therefore let Securitas handle security. 18

Business Focus Alarm to Response for Smaller Companies and Retailers For small and medium-sized companies Securitas has a wide variety of products and services in the areas of Guard Services and Alarm Systems. Securitas today has about 125,000 connected alarms for smaller and medium-sized companies. Small companies are just as dependent on protection and preventive security as large companies, but in most cases they do not require the sophisticated solutions needed by the large companies. Based on a risk assessment, an alarm and response plan is formulated, often complemented with mobile patrol guarding depending on the customer s needs. In most cases the company has a fire and/or burglary alarm connected to one of Securitas alarm monitoring stations. When an alarm is triggered, the action is immediate. The operator at the alarm station monitors the alarms, sends out call-out-guards and calls in extra resources if needed. When the guard responds, it is to limit the damage that has occurred or to otherwise handle the situation. If need be, the guard can also call in the police, an emergency service or a repair crew. Help from the mobile patrol guard Many smaller companies complement their alarms with mobile patrol guarding. The company s premises will then be visited at different times of the day and night by a Securitas guard whose task it is to handle everything from closing and locking fire doors to turning off the coffee brewer. The guard checks, intervenes and also calls for help if need be. The customer gets regular reports of what has occurred and is thus made aware of any shortcomings in the company s security planning. SECURITAS ANNUAL REPORT 1997 Customer in focus Customer segment Small customers/ Retail Growing security needs at gas stations Securitas works for gasoline and service stations in many European countries. These businesses are today often open around the clock and, in addition to gasoline and accessories, often sell food items and other goods. The security requirements vary. Since these businesses handle gasoline, there is always a fire hazard. The risk of theft has also increased as attractive goods are being exposed more than before. For this type of facility Securitas has created security solutions which include burglary, fire and assault alarms, and TV surveillance and pilferage control. The staff deposits the daily receipts in special safes that are emptied regularly by Securitas. Once the money is deposited in the safe, it is protected by Securitas. Securitas has created specially adapted security solutions for gas and service stations. 19

Area patrolling It is becoming increasingly common for small companies to unite and purchase the services of a mobile patrol guard. Assignments can develop into area patrolling when, aside from the businesses, the local community becomes engaged. Drammen in Norway and Vimmerby in Sweden are examples of cities where Securitas has such assignments. Area patrolling is often suitable in smaller communities where the police have limited resources. There are examples of how area patrolling has led to a drastic reduction in crime in a community, while the citizens have quieter and safer streets and public places. A community that invests in security will also be more attractive to new companies and inhabitants. There is also area patrolling in the central parts of large cities, where stores and banks hire guards who regularly visit their premises. In this way they get peace and quiet in their surroundings and at the same time prevent shoplifting, theft and threats. A uniformed guard is often the most effective protection against different types of crimes. Many stores retain the services of a Securitas mobile patrol guard. A uniformed guard patrolling in an area is effective protection against many types of crimes. Alarm systems for chain operations There are small businesses that are part of national chains of stores, restaurants and other service companies. Their operations are often distinguished by the fact that all units look alike and function in much the same way. For these companies Securitas has developed the Response concept. The customer purchases a standardized alarm system for a fixed monthly fee, which includes service, support and alarm intervention. A specialized alarm station, the Customer Care Center, monitors and manages the alarms around the clock. When an alarm is triggered the operator will soon discover any false alarms. The center can concentrate on the live alarms and arrange for a guard to intervene. In its basic form, Securitas Response is a burglary alarm which can easily be expanded to include fire warning features, access control, assault alarm, TV monitoring and image transfer. All parts are directly 20